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What are the steps taken in order to make a purchase?
- 1) Problem Recognition
- 2) Information Search
- 3) Evaluation of Alternatives
- 4) Product Choice
For many of today's consumers, what is one of the biggest problems they face?
- Having too many choices. This is called:
- Consumer hyperchoice
Explain consumer hyperchoice
A condition where a large number of available options forces us to make repeated choices that may drain psychological energy while it saps our abilities to make smart decisions.
What perspective do consumer reseachers typically apply to understanding decision making? Explain.
- This is where we calmly and carefully integrate as much information as possible with what we already know about the product, weigh the pros and cons of each alternative, and then make a satisfactory decision.
What is the economies of information approach to the search process?
It assumes that we collect just as much data as we need to make an informed decision.
What is utility?
The rewards received after the additional information.
What does the rational outlook consumers have imply to marketing managers?
- That they should study the steps in decision making to understand how consumers
- Obtain information
- How they form beliefs
- What criteria they use to make product choices
Do consumers go through this elaborate rational decision making process with every purchase decision?
What is purchase momentum?
This occurs when our initial impulse purchases actually increase the liklihood that we will buy even more. (Plunge into a spending spree)
Cognitive processing style. What is rational system of cognition? What is experiential system of cognition?
- RSC-processes information analytically and sequentially using roles of logic.
- ESC-processes information more holistically and in parallel
What is constructive processing?
We evaluate the effort we'll need to make a particular choice and then we tailor the amount of cognitive 'effort' we expend to get the job done.
What is behavioral influece perspective?
when we decide to buy something on impulse because it just looks cool.
Extended problem solving
Decisions involving this correspond most closely to the traditional decision-making perspective.
Limited Problem Solving
Usually more straightforward and simple.
Habitual Decision Making/Routine Response
Low cost products, frequent purchasing, low involvement, little thought
Characteristics of Limited vs Extended Problem Solving
- Information Search
- Alternative Evaluation
"Unfreezing" our habit
Can get frozen in one brand and then never try a new one.
Problem Recognition. Which step is this? What causes it? What are the different states?
- Run out of product. Realize a need or want.
- Actual State need recognitionIdeal State opportunity recognition
What is primary demand?
Trying to create demand for a general category
What is secondary demand?
Trying to create demand for a specific brand
What is information search?
The process by which we survey the environment for appropriate data to make a reasonable decision.
Recognize a need and then search the marketplace for specific information.
Browsing just for the fun of it or because you like to stay up-to-date on what's going on in the marketplace.
Deliberate vs "Accidental" Search
you know this
Mental Accounting. What is framing?
- Analyses of people's responses to situations illustrate the principles of mental accounting.
- The problem we pose
This is the name given to the decision making bias caused by the fact that if you've paid for something you're more reluctant to waste it.
Describes people who are so obsessed with preparing for the future that they can't enjoy present.
Bias where we emphasize our losses more than our gains.
Describes how people make choices-it defines utility in terms of gains and losses.
The belief that there may be negative consequences if you use or don't use a product or service.
What are the 5 types of perceived risks?
Monetary, functional, physical, social, psychological
The alternatives a consumer knows about
The ones from the evoked set that he actually considers.
What is the knowledge structure?
This term refers to a set of beliefs and the way we organize these beliefs in our minds.
What is the basic level category? What is the superordinate category? What is the subordinate category?
- Middle level. Typically the most useful to classify products.
- Broader category. More abstract.
- More specific. Often include individual brands.
What are the ways you can categorize products?
- Positioning strategy-consider the product within a given category. eg-incredible edible egg, orange juice all day.
- Identify competitors
- Create an exemplar product-more easily recognize and recall. Brands we strongly associate with a category gets to call the shots.
- Locate products in a store-product categorization. fitting into categories.
The dimensions we use to judge the merits of competing options.
The features we actually use to differentiate among our choices.
In order for a marketer to effectively recommend a new decision criterion, what 3 pieces of evidence should it convey?
- 1)point out there are significant differences
- 2)Supply the consumer with a decision making rule (if...then...)
- 3)Convey a rule that is consistant with how the person made the decision on prior occasions.
What is neuromarketing?
- Uses functional magnetic resonance imaging, which is:
- a brain scanning device that tracks blood flow as we perform mental tasks.
An intermediary that helps to filter and organize online market information so that customers can identify and evaluate alternatives more efficiently. eg Yahoo!, directories, forums, fan clubs
The idea is that we no longer need to rely on only big hits to find profits. Companies can make money if they sell small amounts of items that only a few people want, if they sell enough different items.
Sophisticated software programs that use collaborative filtering technologies to learn from past user behavior in order to recommend new purchases. eg Amazon's recommendations
Electronic Recommendation Agent
A software tool that tries to understand a human decision maker's multiattribute preferences for a product category as it asks the user to communicate his preferences.
The people who supply the customer reviews that shoppers rely on to guide search.
Mental rules of thumb. What we fall back on when limited problem solving occurs prior to making a choice.
The visible element that communicates some underlying quality. Eg used car, outside shiney.
The associations we have among events that may or may not actually influence eachother.
Market beliefs. What are some common market beliefs?
- The assumptions we form about companies, products and stores.
- Brand, store, price/discount/sales, advertising and sales promotion, product/packaging.
The tendency to prefer products or people of one's own culture to those of other countries.
The tendency to prefer the number one brand over the competitor.
Buying the same brand everytime you go to the store. Buying the brand out of habit merely because it requires less effort. "Unfreeze"
What are the two categories used when more thought goes into decision making?
Compensatory and noncompensatory.
When is noncompensatory decision making used? What are the 3 rules?
- When we feel that a product with a low standing on one attribute can't compensate for its flaw even if it performs better on one attribute.
- Lexicographic-best on the most important attribute; elimination by aspect-same as lexicographic, except he imposes specific cut-offs; conjunctive-processing by brand, not attribute.
What is the compensatory decison making rules? What are the 2 types?
- Gives a product a chance to make up for its shortcomings. More involved with purchases.
- Simple additive-largest number of positive attributes; weighted additive-also takes into account the relative importance of positively rated attributes.